Oxford Square Capital Q2 2023 Earnings Report

Oxford Square Capital EPS Results

• Actual EPS: $0.13
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Oxford Square Capital Revenue Results

• Actual Revenue: $13.51 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Oxford Square Capital Announcement Details

• Quarter: Q2 2023
• Date: 8/10/2023
• Time: N/A
• Conference Call Date: Thursday, August 10, 2023
• Conference Call Time: 9:00AM ET

Oxford Square Capital (NASDAQ:OXSQ) is a business development company, operates as a closed-end, non-diversified management investment company. It is a private equity and mezzanine firm. The firm invests in both public and private companies. It invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, common stock and syndicated bank loans. The firm primarily invests in debt and/or equity securities of technology-related companies that operate in the computer software, Internet, information technology infrastructure and services, media, telecommunications and telecommunications equipment, semiconductors, hardware, technology-enabled services, semiconductor capital equipment, medical device technology, diversified technology, and networking systems sectors. It concentrates its investments in companies having annual revenues of less than $200 million and a market capitalization or enterprise value of less than $300 million. The firm invests between $5 million and $30 million per transaction. It seeks to exit its investments within 7 years. It serves as the investment adviser to TICC. Oxford Square Capital Corp., formerly known as TICC Capital Corp., was founded in 2003 and is headquartered in Greenwich, Connecticut.

Oxford Square Capital Q2 2023 Earnings Call Transcript

Key Takeaways

• Net investment income: Q2 2023 NII was $6.7 million ($0.13/share), up ~$200K from Q1, and NAV increased to $2.88/share from $2.80.
• Total investment income: Rose to $13.5 million driven by higher interest income, with $8.3 million of net unrealized gains versus $200K of depreciation last quarter.
• Capital activity: Sold $13.9 million of investments and received $0.4 million in repayments in Q2, held $43 million in cash, and post-quarter redeemed $40 million of 6.5% notes due 2024.
• Distributions declared: Board approved monthly payouts of $0.035/share for October–December 2023 and a special distribution of $0.12/share (record date Sept 15, pay date Sept 29).
• Market environment: US leveraged loan prices improved (Morningstar LSTA index up to 94.24% of par), defaults rose to 1.71%, and distress ratio eased to 6%.

[Operator]

Hello, everyone, and welcome to Oxford Square Capital Corporation Second Quarter 2023 Earnings Conference Call. My name is Bruno, and I'll be operating your call today. During this presentation, you can register to ask a question by pressing star followed by 1 on your telephone keypad. I will now hand over to your host and CEO, Jonathan Cohen. Please go ahead.

[Speaker 1]

Thanks very much. Good morning, everyone, and welcome to the Good morning, everyone. Good morning, everyone. Good morning, everyone. Good morning, everyone.

[Speaker 1]

Good morning, everyone.

[Speaker 2]

Good morning, everyone. Good morning, everyone. Good morning, everyone. Good morning, everyone. Good morning, everyone.

[Speaker 2]

Good morning, everyone. Good morning, everyone. Good morning, everyone. Good morning, everyone. Good morning, everyone.

[Speaker 2]

Good morning, everyone. Good morning, everyone.

[Speaker 1]

Good morning, everyone. Good morning, everyone. Bruce Rubin, our CFO and Kevin Yonan, our Managing Director and Portfolio Manager. Bruce, could you open the call today with a discussion regarding forward looking statements? Sure, Jonathan.

[Speaker 1]

Today's conference call is being recorded. An audio replay of the conference call will be available for 30 days. Replay information is included in our press release that was issued This morning, please note that this call is the property of Oxford Square Capital Corp. Any unauthorized rebroadcast of this call in any form is strictly prohibited. At this point, please direct your attention to the customary disclosure in this morning's press release regarding forward looking information.

[Speaker 1]

Today's conference call includes forward looking Statements and projections that reflect the company's current views with respect to, among other things, future events and financial performance. We ask that you refer to our most recent filings with the We do not undertake to update our forward looking .com. With that, I'll turn the presentation back to John Paul. Thank you, Bruce. For the quarter ended June 30, Oxford Square's net investment income was approximately $6,700,000 or $0.13 per share, which was approximately $200,000 greater than for the prior quarter.

[Speaker 1]

Our net asset value per share stood at $2.88 compared to a net asset value per share of $2.80 for the prior quarter. For the Q2, we recorded total investment income of approximately $13,500,000 As compared to approximately $12,900,000 in the prior quarter. That increase in total investment income was Principally driven by an increase in interest income from our loan portfolio. In the Q2, we recorded net unrealized appreciation on investments approximately $8,300,000 or $0.16 per share compared to net unrealized Depreciation on investments of approximately $200,000 in the prior quarter. In the second quarter, we recorded realized losses on investments approximately $3,300,000 There were no realized gains or losses in the prior quarter.

[Speaker 1]

During the second quarter, Our investment activity consisted of sales of approximately $13,900,000 and repayments of approximately $400,000 There were no purchases made during the quarter. As of June 30, we held cash and cash equivalents of approximately $43,000,000 Subsequent to quarter end, on July 24, we redeemed $40,000,000 of the $64,400,000 in aggregate principal amount I've issued outstanding 2024 6.5 percent notes. The notes were redeemed at 100% of the principal amount of $25 per note plus accrued in unpaid interest. On August 3, 2023, Our Board of Directors declared monthly distributions of $0.035 per share for each of the months ending October, November, December of 2023. Our Board also declared a special distribution of $0.12 per share, which has a record date of September 15, 2023 and a payment date of September 29, 2023.

[Speaker 1]

Additional details regarding record and payment date information can be found in our press release was issued this morning. With that, I'll turn the call over to our portfolio manager, Kevin Castigliano. Kevin? Thank you, Jonathan. During the quarter ended June 30, 2023,

[Speaker 3]

U. S. Loan market performance improved versus the prior quarter. U. S.

[Speaker 3]

Loan prices, as defined by the Morningstar LSTA U. S. Leveraged Loan Index, Increased from 93.38 percent of par as of March 31 to 94.24 percent of par as of June 30. According to LCD, during the quarter, there were some pricing dispersion with BB rated loan prices increasing 69 basis points or 0.7%, B rated loan prices increasing 134 basis points or 1.43 percent and CCC rated loan prices increasing 212 basis points or 2.7% on average. The 12 month trailing default rate for the Morningstar LSTA U.

[Speaker 3]

S. Leverage Loan Index Increased to 1.71 percent by principal amount at the end of the quarter from 1.35% at the end of March 2023. Additionally, the distress ratio defined as the percentage of loans with a price below 80% of par ended the quarter at 6% Compared to approximately 6.3% at the end of March 2023. During the quarter ended June 30, 2023, U. S.

[Speaker 3]

Leverage on primary market issuance was $47,700,000,000 representing a 15% decline versus the quarter ended June 30, 2022. This was driven by refinancing activity as both M and A and LBO activity remained slow. At the same time, U. S. Loan fund outflows As measured by Lipper were approximately $6,100,000,000 for the quarter ended June 30, 2023.

[Speaker 3]

We continue to focus on portfolio management strategy designed to maximize our long term total return and as a permanent capital vehicle, we historically have been able to take a longer term view towards our investment strategy. With that, I will turn the call back over to Jonathan.

[Speaker 1]

Thanks, Kevin. Additional information about Altman Square Capital Corp. 2nd quarter performance has been posted to our website at www.oxfordsquarecapital.com. And with that operator, we're happy to poll for any questions.

[Operator]

Thank you. We have no questions registered. So I would like to hand back to Mr. Jonathan, our CEO. Please go ahead.

[Speaker 1]

Thank you very much. I'd like to thank everyone who participated in this call and everyone who listens to the replay. We look forward to speaking to you again soon. Thanks very much.

[Operator]

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines. Thank you.